The power of saving

In Nairobi's tough and impoverished slums, putting aside cash for the future or to start a business can seem like a distant dream. But, as Roberta Radu finds out, a community scheme is making saving easier for local women

Finances under discussion in Kibera. The groups set their own interest rates at which loans are repaid. Photograph: Julia McKay/guardian.co.uk

'No photos!" a man shouts as our car drives past. His eyes follow the moving car and the camera that peers through the open window. Then he picks up a stone from a pile of rubble and throws it forcefully in the air, hitting the boot with a loud bang. This is Kibera, a slum on the outskirts Nairobi made up of a spider's web of steep inclines littered by foul-smelling rubbish and open sewers.

The World Bank estimates that 45% of Kenyans live below the poverty line. There is, however, hope in sight as thousands of women around Kenya come together to bring an end to poverty through savings. Group Savings and Loans (GS&L) is a process pioneered by CARE International. It enables women to form groups to save money together, and then take out loans from these funds at rates of interest established by the groups themselves.

The groups also run a social fund that helps members deal with emergencies, and community-based organisations offer training on commercial skills, which enables women to start small local businesses, such as shops or market stalls.

Irene Bwire, 37, heard about GS&L from a friend and joined because she needed to develop a livelihood for her three children. Irene has twice lost everything. The first time was in 2006, when her husband passed away from cancer. "We were doing well; he was working and the children were going to school. It was a long process, but I took care of him until the last minute. He died in my arms," she says.

In those days she could not even afford food, let alone pay school fees, so she decided to start a business. A year later, her shop was looted when Kenya erupted in tribal violence following President Kibaki's re-election.

Now, Bwire does embroidery and can often be found working day and night at home. She saves money and takes loans from the group to buy materials. Later, she returns the loan with the money she earns through sales.

In Laini Saba, which some inhabitants reckon is Kibera's most dangerous village, Rica Women's Group has managed to bring about societal change. Having to rely on as little as 20 shillings (13 pence) a day, Florence Nyasimi, 33, left her five children alone for hours at an end, much to the anger of her husband, who became abusive.

"I went out to earn money, but he was really mad because I was not at home. He would take the little money I had and go drinking, so I still had nothing the next morning," she says.

Determined to keep their children in school, the women got together to save, and opened businesses that provide around 300 shillings a day. Their husbands now come home to a meal, the children are looked after and domestic violence has decreased dramatically.

GS&L is not simply a Kiberan organisation. In a colourful dress and orange headscarf, Dolphine Aluocho does not appear to be any different to the other women in her village of Nango, in western Kenya. If anything, she blends in as a 50-year-old widow with 10 dependants, two of whom are her brother-in-law's orphaned children.

When it comes to business-making, however, Aluocho is an inspiration to her community. Since starting GS&L with other women in 2007, she has developed seven businesses.

"Once I finish establishing a business, I think of the next one," she explains while sitting in her motorbike parts shop in Nango. One of her sons is studying to become an architect, her income is steady and the respect she commands in the village is unrivalled by any man.

Those were the objectives of Nelly Otieno, sector manager at CARE Kenya, when she rolled out GS&L in 2004 – to great opposition from donors, officials and locals, who didn't understand how it could be relevant for very poor people.

The past seven years have been as much of a learning process for her as they have been for the groups. "We started with no groups, two staff members and five districts to cover. At the end of this May, we had 325,000 people in GS&L," she says.

The project has engaged local organisations and individuals to spread the word and has modified the manual to accommodate the needs of the groups.

"When we were designing GS&L we had the following in mind: how do we instil the savings culture in Kenya? Now, that is what makes me happy – to see that people do not want to stop saving. It has become part of their lives," says Otieno.

A longer version of this feature, together with four related case studies, can be found online at guardian.co.uk/journalismcompetition